Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small table lamp production will require 275,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.
-Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to desk lamp production if actual direct labor hours for the period for desk lamps is 118,000 would be
A)$118,000
B)$200,000
C)$188,800
D)$125,000

Question

Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small table lamp production will require 275,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.​
-Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to desk lamp production if actual direct labor hours for the period for desk lamps is 118,000 would be
A)$118,000
B)$200,000
C)$188,800
D)$125,000

Quizplus · Accepted Answer

The plantwide factory overhead rate is calculated as total factory overhead divided by total estimated direct labor hours: $640,000 / 400,000 hours = $1.60 per direct labor hour. For desk lamps, with actual direct labor hours of 118,000, the allocated factory overhead would be 118,000 hours * $1.60/hour = $188,800.

Blackwelder Factory Produces Two Similar Products: Small Table Lamps and Desk